The media loves to write about China’s failure to protect foreign company intellectual property. But those articles can be misleading. They often fail to state whether the foreign company actually registered its IP in China at all, and they nearly always fail to distinguish between the various types of IP eligible for protection. Both of these shortcomings are meaningful.

Registration Required

China generally does not protect any IP unless it is registered in China. Though there are a few exceptions to this rule, the bottom line is that it will always be cheaper for a company to register its IP than to litigate whether it comes within any exception.

The failure to distinguish among the various types of intellectual property leads companies to believe that enforcement of intellectual property in China is poor across the board, but that is simply not true. China’s patent law system is difficult and spotty, at best. Copyright protection in China — particularly of DVDs, CDs and software — is downright terrible. But its protection of trademarks is actually quite good, and getting better all the time. China’s better courts (usually found in China’s more commercialized cities) are actually quite good in enforcing trademark rights. There is a widely believed theory that countries start enforcing IP rights when their more powerful domestic companies demand enforcement because they themselves have IP worthy of protection.

With respect to trademarks in China, that time has already arrived. As proof of this, I often talk about an incident in China involving watermelon and rumors of their having been tainted by AIDS. A group of watermelon farmers in Linquan county, (a county in Shandong Province known for the high quality of its watermelons) had registered a trademark for their watermelons and established an association to promote them. The Linquan watermelons had, according to the Shanghai Daily, became “the top sellers, even though their price was much higher than watermelons from other regions.” Sales of Linquan watermelons then plunged amid rumors they had been injected with HIV tainted blood.

The rumors had a devastating impact on sales. The newspaper interviewed one of the farmers who said he planted more than 6.7 hectares of watermelon this year. Before the rumors, he had sold out all of the watermelons harvested. After the rumors, much of his inventory rotted.

It should be clear from this incident that securing a trademark in China can be an effective tool for distinguishing your product from the competition and for allowing you to charge a premium price for it. That is exactly what happened here. The efficacy of trademarks in China allowed the Linquan farmers to charge way more than others and yet sell out of their watermelon crop, yet it also caused its rivals to feel they needed to spread the vicious AIDS rumor.

First to Register

So now that I have (I hope) convinced you that it makes sense to protect a trademark in China, the next step is to explain how to do so. Easy. Register it. Plain and simple. China is a "first to register" country, which means that unless your trademark is a well known mark (and let me assure you it almost certainly is not, and you definitely do not want to be litigating this issue in any event), whoever registers it in China first gets it. Put another way, to expect trademark protection in China, foreign companies must register their trademarks in China — and the prudent company does this before going in.

There are actually a number of people in China who make a living by usurping foreign trademarks and then selling a license to that trademark to the original license holder. Once one comes to grip with the fact that China, like most of the rest of the world is a “first to file” country, one can understand how easy this usurpation is, and also, how easy it is to prevent it.

The fact that you are manufacturing your product in China just for export does not in any way minimize the need for you to protect your trademark. Once someone registers “your” trademark in China, they have the power to stop your goods at the border and prevent them from leaving China.

China's trademark requirements are actually quite similar to those in most other countries. The trademark must not conflict with an existing Chinese trademark and it must be distinctive. China allows for registration of all marks for goods, services, collective marks and certification marks.

In deciding what to trademark, foreign companies must consider all sorts of things. Take Starbucks, for instance. Starbucks registered more than 200 trademarks in China. It has registered Starbucks in English and the translation of “star” and “bucks” together in Chinese. Any foreign company strategizing about what to trademark in China must have a fluent Mandarin speaker to assist. Indeed, some of the very largest foreign companies register trademarks in other dialects used in China as well.

China’s Trademark Office maintains a centralized database of all registered and applied-for trademarks. Trademark applications that pass a preliminary screening are published by the Trademark Office and subject to a 3-month period for objection. If there are no objections within this 3-month period, or if the Chinese Trademark Office rejects the objections as frivolous, the trademark is registered. If the Chinese Trademark Office supports an objection, it will deny the application. Denied applications may be appealed to the State Administration of Industry and Commerce Trademark Review & Approval Board and then to the People’s Court. Based on our experience, objections to trademarks are rare.

Trademarks Given Wide Protection

A Chinese trademark gives foreign companies a surprising amount of protection in China. If a foreign company learns that its trademark is being infringed in China, it has a number of actions available to it.

We usually advise our clients to pursue a multi-pronged approach to protect an infringed upon trademark and to pursue the infringer. The foreign trademark owner should usually file a lawsuit against the infringer, seeking damages and an injunction stopping the infringer from continuing to sell the infringing goods. The Chinese courts in the more commercialized regions are actually quite willing to enforce China’s trademark laws, even for foreign companies. Trademark infringement is a crime in China. For serious cases of infringement, a complaint to the office of the public prosecutor can often result in a criminal prosecution against the infringer. The Chinese police will close the offending operation and seize the counterfeit goods. The courts are authorized to impose both fines and imprisonment. Finally, if the counterfeit goods are destined for export, a notice to the Chinese customs authorities will prevent export of the counterfeit goods.

applications is increasing rapidly. Because China operates according to a first-file doctrine in which the first applicant for a trademark will pre-empt all later applicants, the need to successfully register trademarks is increasingly important. Once registered, the trademark is valid for ten years and can be renewed indefinitely. Trademarks that may be registered include commodity trademarks, service trademarks, collective marks and certification marks.

Difficulty: Moderately Challenging

Instructions

Things You'll Need:

Trademark attorney

Power of attorney

Trademark application

Copies of your trademark specimen

Find a trademark attorney to assist you with registering your trademark. This is important for researching already-registered trademarks. An attorney should help to conduct an official search of existing trademarks and their status, both by using the official database and by filing with the CTMO. Your trademark must be a "visible mark;" trademarks for sounds or smells are not granted in China. An attorney is also important because your application must include a Chinese translation. The Chinese translation of the applicant's name and address is a requisite for applications.

Identify the laws which regulate trademark registration between your country and China. Under Chinese law, your trademark is subject to any laws, regulations, or treaties between your country and China and any international laws to which both countries are party.

Determine the classification of commodities under which you will register your trademark and the scope of your trademark claims. This information must be declared in your application.

Ensure that your trademark adheres to Chinese laws and restrictions. For example, the image may not include insignia of any country, and may not involve only generic names. Conduct a search to endure that your trademark is not to similar to any already registered.

If your trademark has been registered first in another country, you are eligible for a right of priority in China (6 months from the day filed in a foreign country). You must claim this right with a written request on the Application Form. Additionally, the Certified Copy of the original trademark application issued by your local registry should be filed with the CTMO along with the Application Form. Nevertheless, if you could not file such certified document with the initial filing, you could submit it within 3 months from the filing date.

Apply for registration with the China Trademark Office (CTMO). The application shall undergo a preliminary examination (to determine document authenticity), followed by a substantive examination. If it passes these examinations, the Trademark Office will publish the application, which, if not opposed, will be registered after three months.

Tips & Warnings

If you are a foreigner with no habitual residence or business office in China, you must appoint a trademark agency designated by the state to assist you in the application process.

If an application for trademark registration is rejected, you may apply with the Trademark Review and Adjudication Board (TRAB) for reexamination.

If you are applying for a certificate trademark or a collective trademark, you must also submit a notarized subject qualification certificate and the administrative regulations on the use of the trademark.

Because one trademark registration refers to only one class of goods, you should register trademarks in as many classes as possible to ensure that no one else may register your trademark in a different class.

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